The Constitution of India clearly specifies the powers that are to be placed under the central and state governments' authority.
Union List: It includes subjects of national importance. The central government alone can make decisions on these matters such as defence of the nation, foreign affairs, banking, currency, and communication. The aim of these matters in Union List is to ensure uniformity in the policy of these areas throughout the country.
State List: It includes matters of state level importance. The state government alone can make decisions relating to the subjects mentioned in this list. It contains matters such as police, trade, agriculture, commerce and irrigation.
Concurrent List: It includes those subjects which are of common interest of both the central and state governments. It includes matters such as education, forest, marriage and trade unions. Both the state and central governments can make decisions on these matters. In case of any dispute, the decision taken by the Union government will prevail.
Residuary subjects: Subjects which do not fall in any of these three lists, are included in Residuary subjects. These contain subjects like computer software that came up after the Constitution, was made. According to the Constitution, the union government has the power to legislate on these residuary subjects also.